Intel Says Tiny Atom Chip Off to the Races

Atom is designed to go into low-cost gizmos that Intel calls Mobile Internet Devices and Netbook computers as well as other devices that may appeal to consumers tightening their belts in the face of a slackening economy.

"Atom is off to a very, very rapid start, far exceeding our expectations when we started the year," Chief Financial Officer Stacy Smith said in an interview on Tuesday. "It's the perfect recession product to have in the marketplace.

Atom is designed to go into low-cost gizmos that Intel calls Mobile Internet Devices and Netbook computers as well as other devices that may appeal to consumers tightening their belts in the face of a slackening economy.

"It plays very well in the mobile marketplace; it plays in emerging markets; it plays into people's desire to have a second PC, or one for the kids that's low-cost yet still capable," Smith said of Atom. "It's off to the races."

That said, the market for Atom is still nascent, and it's unclear just how large the segments Atom is targeted at will become. Intel faces slowing growth in its mainstay PC business and needs to find new areas of sales growth.

"We'll know kind of in six months how much of this demand (for Atom) is real and how much is customers thinking they're going to win in the market place and double-ordering," Smith added. "It seems to be growing the market rather than cannibalizing existing PC sales."

He also stuck to his forecast for overall revenue in the current third quarter of $10.0 billion to $10.6 billion. "Of course I'm still comfortable with it. It's still my forecast."

Analysts currently expect the company to have third-quarter revenue of $10.3 billion, according to Reuters Estimates.